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Failed merger leads to business litigation

There are numerous reasons why an Arizona company would agree to be purchased by another company. Mergers can provide a smaller company with access to more capital, equipment and customers than it would have alone. In addition, it can save a struggling company from having to close its doors completely. When an anticipated merger fails, the consequences can be devastating, and business litigation could follow.

A company named Vivint Solar recently filed a claim against SunEdison Inc. for breach of contract. The two companies had entered into a merger agreement in July 2015 under which SunEdison would purchase Vivint for around $2.2 billion. The purchase price was to be paid with stock, convertible notes and cash. Vivint was to become part of SunEdison's small commercial and residential development business as a result of the merger. Furthermore, the management team at Vivint would remain intact and be integrated into SunEdison's existing structure.

However, when it came time to consummate the merger, SunEdison failed to keep up its end of the contract. Vivint subsequently cancelled the merger, citing a "willful" breach of contract on the part of SunEdison. Like many other companies, Vivint has shareholders to answer to, and it seeks a monetary judgment for the benefits shareholders were to receive if the merger had gone as planned.

Not every merger goes as planned. An Arizona company needs to be aware of what legal remedies are available to it if the other party fails to perform under the contract. Business litigation is always an option, but there could be other remedies outlined in the contract that must be pursued prior to filing a lawsuit. Furthermore, if the matter can be resolved without a courtroom battle, it could save the parties the time and money such an undertaking would require.

Source: solarindustrymag.com, "Vivint Solar Calls Off SunEdison Merger", March 8, 2016

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